On March 21, 2008, the SEC filed a civil action against W
Financial Group, LLC, and its principals, Adley Abdulwahab a/k/a Adley Wahab,
Michael K. Wallens, Sr. and Michael K. Wallens, Jr., alleging they fraudulently
offered securities, known as Secured Debt Obligations (SDOs), to mostly elderly
people and retirees.† According to the complaint, the defendants collected more
than $17 million by representing the SDOs offered safety comparable to
FDIC-insured certificates of deposit and were protected by multiple layers of
insurance policies from major carriers, such as Lloyds of London.† The SEC also
alleged that the defendants represented investor funds would be placed in a
limited category of low-risk investments.

According to the complaint, W Financial had no insurance
policies protecting the SDOs, and the defendants diverted nearly all investor
funds to purchase assets that placed investor funds at considerable risk.†
Moreover, the SEC alleged that W Financial failed to disclose to investors that
it was barely earning sufficient funds to make current monthly interest
payments and was not accumulating sufficient returns to eventually pay back
investor principal or interest to investors who elected to compound their
returns.†

For more information about the SECís action, you can read Litigation Release Nos. 20515 (Apr. 3, 2008) and 20621 (June 17, 2008 ).